The goals of this project are to advance a high-resolution understanding of the cellular roles of the SH2 domain-containing phosphatase 2 (SHP2) and to elucidate molecular mechanisms underlying its regulation, by applying advanced protein engineering technologies. Encoded by the gene PTPN11, SHP2 has important roles in normal signaling, oncogenesis and developmental disease. SHP2 has a modular architecture, and at least four distinct regions of SHP2 individually could serve as signaling nodes: the N-terminal SH2 domain, C- terminal SH2 domain, phosphatase (PTP) domain, and pY motifs in the unstructured C-terminal region. SHP2 can act via at least four different mechanisms: (i) as a targeted PTP that removes pY from other molecules that interact with SHP2 SH2 domains or with its C-terminal pY motifs; (ii) as an adaptor that links pY-containing proteins to GRB2/SOS; (iii) as a competitive inhibitor for the interaction of pY motifs with other SH2 domains; and (iv) potentially as a redox sensor. The role of these mechanisms appears to be signal/pathway-dependent. Because of the functionally overlapping roles and integrated behavior of the nodes in SHP2, it has been challenging to define contributions of these mechanisms to specific signaling events and how these mechanisms are altered in diseases. A major obstacle to attacking these fundamental questions in SHP2 biology and pathogenesis has been the absence of selective and potent inhibitors. Genetic knockdown does not provide a node-level resolution or rapid temporal resolution required. This project will utilize innovative protein engineering technologies to generate high-performance binding proteins to SHP2 signaling nodes that can be genetically encoded for intracellular use. We will utilize the designer binding protein platforms, termed monobodies and pY-clamps, that we have pioneered and refined over the last decade. These designer binding proteins, unlike conventional antibodies and their fragments, readily fold into their functional form under reducing conditions of the cytoplasm. We have already generated monobodies and pY-clamps that recognize SHP2 signaling nodes with exquisite specificity and high potency. We will extend these initial successes to generating a comprehensive set of genetically encoded tools for biochemically controlling SHP2 function in cells. Using these tools, we will (i) establish a quantitative understanding of the structure-function relationship of SHP2 regulation, (ii) define the cellular roles of the mechanisms of SHP2 function in diverse signaling contexts and in oncogenesis, and (iii) identify direct substrates of SHP2 PTP and their roles in signaling. Potent and selective molecular tools that can probe the role of a specific node of a single phosphatase in specific signaling pathways will greatly aid our understanding of how phosphatases influence cellular physiology and disease pathogenesis, and inform drug discovery effort directed to this important class of regulatory proteins.